“I must stress we do not want to grow AUM for AUM’s sake. We are not, out of the blue, going to go into new asset classes where we have no inherent abilities,” says Lee Chee Koon, group CEO of CapitaLand, and CEO-designate of CapitaLand Investment (CLI). That is likely to differentiate CLI from other real estate investment managers (REIMs) including homegrown ARA Asset Management.
At any rate, with $10 billion of property, and the ability to recycle these assets, to form partnerships with Capitaland Development, other capital partners to acquire and develop property, and with a renminbi fund management licence, CLI has a lot of optionality for growth. Following details of how CLI plans to enhance shareholder value through this thoughtful growth, and without collecting AUM needlessly, CapitaLand’s share price is at a new decade high ending above $4 on July 22.
What should investors do? The decision should be easy. Hang on for the 95 cents in cash, and keep the CLI shares for the time being. There could be an issue with odd lots of CapitaLand Integrated Commercial Trust (CICT) units, and CICT may come under a little bit of pressure should investors not interested in yield plays decide to divest of these units. Traders may decide to bail out given the mildly overbought readings of CapitaLand. Its EGM is on Aug 10 and prices may stay resilient ahead of this date.
